So, Im level 7 and I'm wandering around Silverwood whacking goblins and the odd orc and I come across a flaming axe which I assume is better than the small axe I bought in Galadon. I'm 'incinerating' and 'roasting' all the fauna I can find and pretty quickly I'm level 8. Cooool!

Well after quitting and logging back on today I head back in to Silverwood and start attacking creatures and instead of 'incinerating' and 'burning' things I'm 'slapping' them. My axe disappeared while I was offline.

Is this because it's some special item or something, is it a bug or am I being a doofus and dropping my eq by accident?

Many powerful items can be found in your travels. These items are too
powerful to be placed inside a container and are very limited within the
Realm. Although limited items can be used by anyone, those players under
level 11 will find that they are too weak to keep these items while they
are not present in Thera. At times these objects can become too widely
spread in the land. When this happens they will occasionally crumble
under certain circumstances.

Some equipment on CF is limited, meaning there is just that many of them in circulation among players. How many there are is based on the power of the weapon, armor or wand. The unicorn pendant is very limited and hard to get(max two), but the flaming is axe quite plenty and fairly easy to get(max.. who knows?). If a player that arent in PK range ( PK range is 11-> ) quit with a piece of limited equipment, it disappear. This happens because it prevent a lowbie character not in PK range to hoard very nice limited equipment, out of reach for anyone.